Key Takeaways
- According to the Tax Foundation, Estonia has the best tax code in the OECD for the 11th consecutive year due to:
- A 20% corporate tax rate only applied to distributed profits
- A flat 20% individual income tax that doesn't apply to personal dividend income
- Property tax that applies only to land value
- A territorial tax system that exempts 100% of foreign profits
The Other Side of “Tax Competitiveness”
Tax Competitiveness as measured by the Tax Foundation prioritizes business mobility and investment flows over other policy goals like:
- Reducing inequality
- Funding robust public services
- Long-term fiscal sustainability
- Democratic choice about the size of government
Estonia's system works well for attracting capital and businesses, but may be sub-optimal for building a comprehensive welfare state or addressing inequality, which many would argue are equally important measures of a successful tax system.
